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A primer on new techniques used by the sophisticated financial fraudster, with special reference to commodity market instruments

Author

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  • Lamon Rutten

    (UNCTAD)

Abstract

Financial instruments such as documentary credit, structured finance and derivatives have proved their value in commodity trade. However, the sophistication of these instruments can also make them a tool for financial fraud. This report discusses how, using commodity market instruments such as letters of credit, warehouse receipts, Special Purpose Vehicles, futures and swaps, the sophisticated financial fraudster may try to trick bankers, commercial counterparties, Government regulatory or tax offices, and shareholders. Various techniques that have been used in the past are described, and illustrated with case studies (e.g. the salad oil swindle, Solo Industries and Enron). Ways in which Governments, banks and commodity firms can reduce the potential for such frauds are summarized in the report’s conclusion.

Suggested Citation

  • Lamon Rutten, 2003. "A primer on new techniques used by the sophisticated financial fraudster, with special reference to commodity market instruments," International Finance 0303001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpif:0303001
    Note: Type of Document - Word; pages: 24; figures: included
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    More about this item

    Keywords

    commodity derivatives fraud SPV Enron;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • F39 - International Economics - - International Finance - - - Other
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G29 - Financial Economics - - Financial Institutions and Services - - - Other

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